"Lie" means to be at rest. As an intransitive verb its forms are: lie, lying, lay, lain. Examples: 1) Lie down. 2) Lying in the sun dries the skin. 3) The parcels lay on the table. 4) We have lain in the sun for thirty minutes.

"Lay" means to put or place something. As a transitive verb, the verb always takes an object. Its forms are lay, laying, laid, laid. Examples: 1) Lay the bricks here. 2) He was laying the bricks in rows. 3) Yesterday he laid the bricks ten high. 4) He has laid all the bricks in the wall.

Note that the present tense of lay is the same as the past tense of lie.